German luxury car maker BMW AG said it was on track to hit record vehicle sales and pretax profit in 2014 after strong sales in China helped it to post a 2.6 per cent rise in first quarter operating profit as forecast.

BMW is investing to expand production capacity and its model range to retain the crown of biggest selling luxury carmaker ahead of Audi and Mercedes. That spending dented earnings before interest and tax, which came in at €2.09 billion, just above the €2.05 billion average forecast in a Reuters poll.

Shares in BMW were indicated up 0.9 per cent, compared to an expected 0.4 per cent opening rise on Germany’s blue-chip DAX index.

BMW’s automotive EBIT margin, the best gauge to compare profitability with peers, was 9.5 per cent in the quarter, higher than the 7 per cent achieved by rival Mercedes-Benz Cars but short of the 10.1 per cent achieved by Audi.

Group vehicle sales of BMW, Mini and Rolls-Royce cars were up 8.7 per cent in the quarter, a new record, helped by a 25 per cent jump in sales in China.

In Europe sales climbed 3.4 per cent, even as sales in Germany fell 1.4 per cent and US sales edged up 2.7 per cent, compared with the first quarter of 2013.

BMW-branded car sales were up 12.1 per cent driven by demand for the X1,X3 and X5 offroaders and its 3-series sedan.

That helped to offset a 12.5 per cent fall in sales at Mini as the company prepared to launch a new version of the brand’s core model.

Munich-based BMW reiterated its aim to achieve a significant rise in sales volume in 2014 to 2 million cars or more – after it delivered a record 1.96 million Mini, Rolls Royce and BMW cars in 2013 – but cautioned that political and economic uncertainty may impact sales in Europe.

BMW Group also reiterated its forecast of a significant rise in group profit before tax to compared with the previous year’s figure of €7.91 billion.